Pharma, p.14
Pharma, page 14
There were limits to how many Sackler could help. Walter Bernstein, for instance, was a screenwriter who had been blacklisted in Hollywood in 1950 after he was named as one of 151 actors, writers, and on-air journalists in Red Channels: The Report of Communist Influence in Radio and Television, a booklet that purported to unmask the “communist domination of the entertainment industry.”45 In September 1952, Bernstein showed up at 11 East 26th Street in New York, the location for four Sackler companies.46 Bernstein met with Leo Davis, a film editor who got a job at Medigraphics after it was disclosed that he had signed the Communist Party petition for putting candidates on the New York ballot.47 Bernstein was low on money and needed a loan and steady work. Davis knew that Bernstein, a talented screenwriter, would be an ideal fit for the promotional and instructional films Medigraphics developed for Sackler’s pharmaceutical clients. The next month, Davis told Bernstein that Medigraphics wanted to hire him. The FBI needed to first clear him.
Bernstein looked startled. “What would they want that for?”
“Medigraphics makes medical films for the U.S. Government.”
Bernstein skipped the job.II
Bernstein was the exception; in most cases Sackler had no problem in hiring blacklisted journalists. The FBI informant told the Bureau that he suspected many of his McAdams coworkers had a Red connection. He pointed to a recent hire, David Gordon, a newspaper reporter. Gordon had been fired from New York’s Daily News the day after he appeared before the Senate Internal Security Subcommittee and refused to answer if he had run the communist “shop paper” when he worked at the Brooklyn Eagle.48
The FBI confirmed that Gordon, going then by the name Alex Gordon, was a copywriter at Sackler’s Medical Press.49 The Bureau quickly discovered that many of the activists and writers it listed as communist sympathizers or former party members had gone unnoticed since Sackler gave them non-byline jobs at his newsletters and promotional publications.50
The New York Times had dismissed Jack Shafer, a foreign desk copy editor, after he invoked the Fifth Amendment before Congress when asked if he was a communist. He took a job at Medical Tribune, Sackler’s biweekly free newspaper that went to 168,000 American doctors.51 Medical Tribune was also where Max Gordon, a former city editor of the New York Daily Worker, found a job. The same was true for Melvin Barnet, a Times copy editor who had testified he was not a communist after 1942 but took the Fifth for the period before that. Although Barnet had an English and classics degree from Harvard and his thesis about Shakespeare won honors, his journalism career was finished. After the Times let him go, he ended up picking oranges in Florida and editing vanity books to pay his bills. Then a friend told him that Arthur Sackler at William Douglas McAdams “had hired others who had lost their job during the McCarthy era.”52 III 53
The Bureau’s probe gathered some momentum when it learned Peter Rhodes, who it had investigated for possible espionage, worked as a McAdams copywriter and editor. Rhodes had been a UPI reporter who had covered World War II for the Office of War Information. He lost his job after a special investigating unit of the House Un-American Activities Committee revealed he had signed petitions for the Communist Party for state and local elections in 1940 and had also listed fake addresses on the forms. During the war, an FBI surveillance team had tracked Jacob Golos, a Ukrainian-born Bolshevik revolutionary and Soviet intelligence operative who was a founding member of the American Communist Party, to Rhodes’s Washington Heights apartment on West 173rd Street. Golos was in charge of recruiting foreign agents. Rhodes was never charged with espionage and after the war denied he was a Soviet asset.54 The agents who worked his case thought he was lying.
The FBI learned from their McAdams informant that Rhodes had recently traveled to Europe and not returned; it was believed he was working there for McAdams International, which Sackler had opened to handle the promotion needs of his foreign pharma clients. Moreover, the informant said that Rhodes was responsible for Sackler hiring Jack Ryan, the former executive vice president of the New York local of the American Newspaper Guild. Ryan had resigned after witnesses publicly identified him as a Communist Party member (he never flatly denied it).55 During his testimony before the House Un-American Activities Committee, when asked about work, Ryan said he was a self-employed horticulturist. At the time, he was on the payroll of Communications Associates, a McAdams subsidiary.56
The FBI informant warned the Bureau that he had become “increasingly suspicious this summer [1956] when Dr. Arthur Sackler, Fritz Silber, two partners—Dr. De Forrest Ely [sic] and Dr. Felix-Ibanez [sic]—and the company accountant, Louis Goldburt, all visited Europe at the same time, ostensibly for pleasure trips.” That was the first time Martí-Ibáñez’s name came up. The Bureau knew that American leftists respected Martí-Ibáñez because he had fought the fascists in the Spanish Civil War.
Martí-Ibáñez traveled often to Switzerland to visit Dr. Henry Sigerist, a pro-Soviet physician who had left America after the FBI declared him a security risk.57 Arthur Sackler, said the informant, “sees Rhodes while visiting there.”58 Some of Sackler’s recent new hires—Fritz Silber and Heinz Norden—were “close associates of Ryan and Rhodes.” That raised the specter of espionage. The memo sent to FBI headquarters noted: “The files of the NYO [New York Office] reflect that Dr. Arthur Sackler to have been an apparently close business contact of Alfred Kaufman Stern, a suspected Soviet agent.”59
The FBI thought it odd that some of Sackler’s companies shared the same address and telephone numbers.60 The top executives overlapped.61 The agents wondered whether the complexity was designed to hide the real owners and sources of funding.62
Relying on original incorporation, legal, and tax papers, the author cross-matched directors, attorneys, accountants, and shared office addresses and telephone numbers to unmask many of the previously secret Sackler enterprises. With some of their earliest ventures, the brothers were not hiding anything from the FBI but rather believed their odds for getting research grants were better if each company seemed independent when it applied to government and private foundations.
No Sackler was listed on the paperwork for the 1945 incorporation of Pharmaceutical Research Associates.IV 63 It was formed to pursue drug research grants. Arthur Sackler did not appear as a director on a corporate filing until 1957, the Laboratories for Therapeutic Research. It also pursued private and public research grants.64
The Sacklers’s strategy worked. Time and again, both Pharmaceutical Research Associates and Laboratories for Therapeutic Research landed private and government funding without anyone realizing the Sacklers controlled both.
Even in instances in which the brothers used their names, they worked an angle. Arthur, for instance, was listed as the “Director of the von [sic] Ophuijsen Center [Creedmoor],” though he had not been formally with that research facility for years. Letterhead for the Ophuijsen Center discovered by the author listed its address as “130 East 50th Street, New York,” the same as the McAdams agency. On another occasion, the electrochemicals department of DuPont de Nemours Company awarded Arthur a generous grant for a clinical trial about amino acids and gastric secretions. For his twenty-one-subject study he was aided by Dr. Lawrence Sophian, listed as the Ophuijsen Center’s “Consultant Pathologist and Director of Research.” There was no such position, although Sophian was real and employed as one of two doctors at the McAdams agency. Dr. Sophian was also one of the directors on the incorporation papers for the Laboratories for Therapeutic Research.65
Landing research grants was only one reason for the corporate maze the brothers created. Another was disseminating pharma-friendly information disguised as unbiased research.66 Their new ventures mimicked the enormous success of Arthur’s Medical Tribune newsletter. Arthur admitted to being the chairman of the board for Medical Press Inc., and president of the Medical Radio and TV Institute and the Physicians News Service (both of which shared with McAdams and other businesses three floors at 130 East 59th Street).67 The author uncovered that Arthur, often with his brothers, had either a significant stake or full ownership in Brooklyn Medical Press (1942), Angiology Research Foundation (1950), Inter America Medical Press (1952), and International Medical Press (1952).68
Purdue Frederick, the patent drug company they bought in 1952, was at the center of most of their grand plans. Yet their Purdue ownership was not transparent, instead initially in the names of two of their lawyers and an accountant.69 The same was true for a 1955 New York corporation, Bard Pharmaceuticals.70 The trio opened their first foreign subsidiaries only three years after buying Purdue.71 Mundipharma Limited (Latin for “world medicine”) and Dagrapharm Limited (Urdu for “people’s drugs”) opened in August 1955 in London.72 Those U.K. companies were followed soon by Mundipharma AG in Basel, Switzerland.73 The author discovered that as was typical of their American operations, the two London companies shared the same address.74 As for the Swiss firm, its address would be the same for fifteen future Sackler-connected Mundipharma-branded companies that opened in Switzerland through 2019 (twelve of which are still active).75
Despite its suspicions, the FBI never got the chance to probe the Sacklers’ businesses. The Bureau was overwhelmed by a deluge of pending investigations about communist domestic infiltration and possible espionage. It had to do constant triage for prioritizing cases. Without any new evidence, the investigation into Arthur Sackler, his companies, and his employees, stalled. The case agents dutifully noted Arthur’s left-wing leanings and his assistance to Communist Party members. The file on him and his brothers remained open.76
I. The first time the Sacklers decided to be the public face of Purdue was in 1960. The brothers had convinced the AMA to join them in launching the “Purdue Frederick–American Medical Association Presidential Award.” It was for “contributions to science and the total welfare of the nation.” The first one went to Dr. Louis Orr, the AMA’s retiring president, and Mortimer Sackler presented it at the annual AMA convention.
II. Director Sidney Lumet helped Bernstein emerge from the blacklist three years later. Lumet hired him to write the screenplay in 1959 for the Sophia Loren film That Kind of Woman. He worked on The Magnificent Seven the following year but did not get credit. Then in 1964 he demonstrated his Red Scare past was truly behind him with the hit screenplay for Fail Safe.
III. The author discovered that when Sackler did not have an opening for one of the blacklisted journalists, he sometimes asked Bill Frohlich for help. William Marx “Bill” Mandel, a reporter who was most famous for his heated exchanges with Senator McCarthy during the House Un-American Activities Committee hearings, got a job at L. W. Frohlich after Sackler made a personal request. The same was true for Carol Greitzer, a feminist activist who later became president of the National Abortion Rights Action League and in 1969 got elected to New York City Council. Once elected, she reduced her work at L. W. Frohlich to three days a week. Mandel’s father, Hyman Robert Mandel, had served on New York’s Citizen’s Housing Council with Sackler’s friend Alfred Stern.
IV. Pharmaceutical Research Associates initially listed its address as the law office of Brooklyn-born brothers Myron and Martin Greene. Martin incorporated the Sacklers’ first charitable foundation in 1947. Both Greenes, and their office secretary, were listed as the sole shareholders for the February 1955 incorporation of Vard Pharmaceuticals (changed a month later to Bard Pharmaceuticals). Vard’s address was also the Greenes’ lower Broadway law office. After it became Bard, the address changed to 259 Broadway, the office of Louis Goldburt, Arthur Sackler’s accountant.
12 THE PUPPET MASTER
What the FBI did not know was that no matter who was listed as the owners on corporate registrations, Arthur was always in control. He was a natural puppet master for his tight circle of family, friends, and business associates.1 It meant he gave far-flung advice on every aspect of their budding businesses. He encouraged Frohlich to create a string of new corporations with sometimes similar names, all of which might come in handy as they expanded.I 2 Arthur convinced his brothers to add two successful products to the Purdue Frederick line, Cerumenex, a prescription earwax remover, and Senokot, a natural laxative. He also set goals for Mortimer and Raymond to continue clinical research into the organic causes of mental illness.
They occasionally bristled at his overbearing way. Help from Arthur was sometimes a euphemism for micromanagement. The wearying family dynamic was that after Arthur helped them—as he did by paying for their medical educations or funding Purdue Frederick—he made them feel as if they were bit players in his grand play.
In the meantime, everyone agreed Arthur had a knack for making money. He told Martí-Ibáñez and Frohlich that the 1955 launch of Pfizer’s tetracycline was not only an opportunity for a redux to his smashing success with Terramycin but a chance to test the synergy in their parallel businesses.3 II 4
Sackler and his McAdams agency pushed the limits of pharma advertising for tetracycline (Pfizer’s brand name was Tetracyn). Frohlich furtively fed him prescribing data collected by IMS. It helped target those doctors who were big prescribers and most likely to be early adopters of new drugs. It also revealed that physicians were receptive to new Pfizer products because of “the reputation and image [the company] has created with the physician for quality and service.”5
Martí-Ibáñez, who was so busy that he suffered from “headaches and insomnia,” helped interpret the IMS data as a sub-rosa consultant for a McAdams subdivision. He was also publishing scholarly articles in Medical Encyclopedia that hyped tetracycline. Some researchers who published in Martí-Ibáñez’s journals complained their work had been edited to include “repeated reference to Pfizer products” and it “gave the impression it was written for Pfizer rather than for physicians.”7
Sackler’s campaign, aided by Frohlich’s prescribing data and the coverage in Martí-Ibáñez’s journals, helped tetracycline sales far exceed Pfizer’s already high expectations. In just over two years it became the most prescribed broad-spectrum antibiotic in America.8
When Lederle realized that tetracycline was a single atom modification of its Aureomycin, it sued Pfizer and simultaneously filed its own patent for tetracycline under the brand name Achromycin.9 That encouraged other drug firms to reexamine their earlier lab research to determine whether their scientists had also isolated tetracycline but failed to recognize it as a stand-alone drug.10 In what one industry analyst described as “an amazing coincidental discovery of the same substance,” Bristol-Myers, Squibb, and Hayden Chemical filed lawsuits seeking to invalidate Pfizer’s patent.11 Each also filed for separate patents contending they were the rightful owners of their branded version of tetracycline.12
The firms prepared for a protracted legal battle. American Cyanamid, Lederle’s parent, bought Hayden’s patent for $600,000 more than its book value.13 Squibb and Upjohn, two that did not have a scientific claim to a tetracycline patent, agreed to pay Bristol’s litigation costs in return for a sizable discount on their bulk purchases of the drug should Bristol prevail.14
As the industry approached the $2 billion milestone in annual sales by mid-decade, the legal battle over who owned the right to tetracycline attracted the attention of Congress.15 III 16 The House Committee on Government Operations began a two-year probe into whether the FTC and FDA were doing enough to regulate the therapeutic claims made by pharma firms.17 New York congressman Victor Anfuso called on the Federal Trade Commission to “conduct a full-scale investigation” to determine if the companies were putting profits ahead of patients and also to determine if there was genuine price competition.
The FTC had good credentials for such an investigation. Earlier in the decade it had conducted highly praised probes into the oil and steel industries. In fact, four years earlier the FTC had opened a preliminary probe into pharma. It had been sparked by a Yale law school professor who noticed, when he had filled a prescription for antibiotics at his local pharmacy, that three brands of the identical drug were priced the same. That puzzled him since the drugs were made by different companies with different manufacturing and development costs. That professor was married to an industrial economist at the FTC. She opened an official inquiry after he told her what he saw.18 But the FTC did not give it the money and personnel to convert it into a serious probe. Anfuso and many of his fellow Democrats intended to change that. They authorized the budget the agency requested—$4.3 million—and by the end of 1955 the FTC had launched a vigorous new inquiry, in which it subpoenaed tens of thousands of company documents.19 Those provided a rare look at how pharma rivals divided markets and blocked new companies’ access to the market.
That FTC investigation was one of several public relations headwinds that pharma faced that year. It was proving difficult to maintain its postwar image of a selfless industry in which companies shared scientific research in pursuit of drugs that saved millions of lives. While there had been more laboratory breakthroughs—the antibiotic erythromycin (1952), synthetic cortisone (1954), the antipsychotics Thorazine (1954) and Serpasil (1955), and oral anti-diabetic medications Orinase and Diabinese—none matched the excitement penicillin had generated.20
Another problem was that the importance of some 1950s innovations would not be immediately evident. It took more than forty years, for instance, before biotechnology firms turned Judah Folkman’s research on the circulatory system into angiogenesis inhibitor therapies, drugs that prevent cancer tumors from using the body’s blood vessels to grow.21 At the University of Washington in 1953, an Italian physician, Rita Levi-Montalcini, isolated nerve growth factor (NGF) from cultures. Scientists at Stanford and Cornell used genetic engineering on NGF a quarter century later to develop drugs that treated cancer and eye conditions that led to blindness. It took until 1986 for Levi-Montalcini to get a Nobel for her discovery of NGF.22 The same happened with two Burroughs Wellcome biochemists who had little success in blocking enzymes to develop an effective leukemia drug in 1953. Thirty-five years later the pair won the Nobel for their research, which led to immune-suppressive drugs that made organ transplants a reality and provided treatment for a broad range of severe autoimmune disorders.23 And finally, a British researcher discovered interferon in 1957, but it took thirty years before gene-cloning technology allowed it to be converted into an effective drug against some cancers.24
